(Refiles to correct a typo in first bullet)
By Joe Cash and Tim Kelly
BEIJING/TOKYO (Reuters) -Trade cooperation between China and Japan has been “severely damaged”, the Chinese commerce ministry said on Thursday, urging the Japanese prime minister to retract her comments on Taiwan or face the consequences.
A diplomatic spat between China and Japan has intensified since Sanae Takaichi told parliament on November 7 that a hypothetical Chinese attack on democratically-ruled Taiwan could trigger a military response from Tokyo.
“Prime Minister Takaichi’s openly erroneous remarks concerning Taiwan have fundamentally undermined the political foundation of China-Japan relations and severely damaged bilateral economic and trade exchanges,” He Yongqian, a ministry spokesperson told a regular news conference.
“Should the Japanese side persist on its course of action and continue down the wrong path, China will resolutely take the measures required and all consequences shall be borne by Japan.”
A spokesperson for Takaichi said her comments on Taiwan did not change existing Japanese policy.
US SAYS IT WILL STAND BY JAPAN
China is Japan’s second-largest export market after the United States, buying about $125 billion of Japanese goods in 2024, mainly industrial equipment, semiconductors and automobiles, according to UN COMTRADE data.
Tokyo could struggle to find alternative markets if China closes its doors to Japanese goods. South Korea, its third-largest export destination, absorbed only $46 billion worth last year, the data shows.
He said she had “no information to provide at present” when asked to confirm reports that China had indicated it would ban all imports of Japanese seafood.
The world’s second-largest economy has a record of taking coercive trade actions against its neighbour.
In 2023, Beijing imposed a blanket ban on imports of all Japanese seafood after Tokyo decided to release radioactive water from the Fukushima nuclear plant into the Pacific. The International Atomic Energy Agency, a U.N. body, had concluded the discharge was safe.
In 2010, China halted rare earth exports to Japan for about seven weeks after Japanese authorities detained a Chinese fishing captain whose vessel had collided with coast guard ships near the Senkaku Islands, which Beijing claims as the Diaoyu Islands.
“Coercion is a hard habit to break for Beijing. But just as the United States stood by Japan during China’s last unwarranted ban on Japanese seafood, we will be there for our ally again this time,” U.S. Ambassador to Japan George Glass said in an X post on Thursday.
Before the 2020 ban, China was Japan’s top scallop buyer and a major importer of sea cucumbers.
Relations had looked to be improving, with Chinese leader Xi Jinping and Takaichi agreeing in a meeting on the sidelines of last month’s APEC summit in South Korea to “build a constructive and stable China-Japan relationship fit for the new era”.
Now, Japanese seafood companies fear a return to past restrictions.
‘NO IMMEDIATE OFF-RAMP’
“What’s frustrating is that things that were moving forward suddenly went backwards. And given the nature of the issue, this might well happen again,” said Kazuya Yamazaki, the president of Sanwa Fisheries, a company on Japan’s northern Hokkaido island that used to export around 200 metric tons of scallops to China annually before imports ended.
His firm is among almost 700 that applied for export permits after China agreed to restart shipments of Japanese marine products.
There is no easy fix, Japanese officials and analysts say.
“There is no immediate off-ramp, unless Takaichi retracts her comments which she will not do as it will be political suicide. China has elevated the situation to a level where they can not easily back down,” said Joseph Kraft, a financial and political analyst at Rorschach Advisory in Tokyo.
“The only solution is to play the long game and wait it out till China begins feeling the pain as well.”
Asked at a regular Chinese foreign ministry news briefing on Thursday whether China’s Premier Li Qiang would meet with Takaichi on the side of this weekend’s G20 summit in South Africa, its spokesperson said there were no plans to do so.
(Reporting by Joe Cash in Beijing and Tim Kelly in Tokyo. Additional reporting by Liz Lee in Beijing. Editing by Himani Sarkar and Mark Potter)
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